Five days into 2007 Cisco Systems continues its acquisition spree from 2006, this time acquiring antispam and antivirus security maker IronPort Systems for $830 million. Announced yesterday, the deal is expected to close in Q3 2007.
The acquisition is the latest in the quickly consolidating security software market. Microsoft, Symantec and others have scooped up smaller firms in an effort to offer comprehensive packages amid waves of computer viruses, spam, and phishing attacks. Known for its growth by acquisition strategy, analysts said they expect the purchase will help Cisco further shed its image as solely a maker of networking infrastructure gear and capitalize on products and services that utilize the network itself.
Even though Cisco was already dominant in the network security arena, the company said it was keenly interested in entering the $2 billion-plus messaging security market, and further profit from the need of businesses to protect their applications from the rising amount of Internet threats. "Enterprises need to provide increase protection for various kinds of communications, such as email and Internet access, as well as protecting data going outbound," said Richard Palmer, senior vice president of Cisco's Security Technology Group, in a written statement. "We see this as a very rapidly expanding market, growing some 25 percent a year."
Scott Weiss, founder and CEO of IronPort Systems, said the rich offer and opportunity to run the company as a separate business unit within Cisco won over the management team during negotiations. The deal also allows IronPort to better compete with rivals, he says. "We were a relative pipsqueak among these giants," Weiss says, referring to companies such as Symantec and SOPHOS. "Now they've given me the keys to an M1 Abrams [battle tank], and we have the firepower to really do some damage in the security market."
The technology acquired from IronPort will allow Cisco to stop threats such as spam and computer viruses before they can reach a company's computer system, says Zeus Kerravala, a network infrastructure analyst with Yankee Group. He expects Cisco to pursue more acquisitions in this market in the coming year. "In 2007, you'll see Cisco come out of the network and have a direct impact on how applications perform and are secured--and this is the first step."